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Chapter 5

This webpage reproduces a chapter of
History of North Carolina

The Lewis Publishing Company
Chicago and New York, 1919
Volume II by
William K. Boyd

The text is in the public domain.

This page has been carefully proofread
and I believe it to be free of errors.
If you find a mistake though,
please let me know!


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Chapter 7

This site is not affiliated with the US Military Academy.

Vol. II
p105
Chapter 6
State of the Finances

Taxation — Revenue and Expenditures — Currency and Banking

Undoubtedly an influence which retarded measures for social and economic progress was the state's financial system. The revenue was small, approximately $50,000 in 1800 and $111,000 in 1830. The sources of income were few, and there was deep aversion to any increase of taxation. Governor Swain in 1835 declared "the history of our state legislation during the first half century of our political existence will exhibit little more to posterity than the annual imposition of taxes amounting to less than a hundred thousand dollars, one-half of which constituted the reward of legislative bodies by which they were levied, while the remainder was applied to sustain the train of officers who superintend the machinery of government."

Another factor in the public finances was the policy toward banking. Liberal charters to the banks permitted an excessive issue of bank notes, so causing an inflation of the currency which produced speculation and depression in business. Subscription to bank stock by the state made possible the retirement of the post-revolutionary currency, the first form of public debt, and also aided in the foundation of the Fund for Internal Improvements and the Literary Fund. On the whole, the financial policy was characterized by inexperience and incompetence. By 1836 the treasury was facing a serious deficit; the crisis was saved by the distribution of the federal surplus. How deeply interwoven with the social and political structure were financial policies, detailed analysis only can show.

p106 The public revenue was derived from three sources, taxation, dividends from bank stock, and sale of public lands. The taxes in turn were of three kinds, the poll, the land, and those which may be termed miscellaneous. Their history really begins with the later Revolutionary period, when depreciation of the currency forced a resort to taxation. Of all schedules, the poll tax was the most stable; prior to 1818, when it was exceeded by the land tax, it yielded an income larger than any other source of taxation; and in 1825 it again became more productive and remained so until 1850. The rate on the poll was, from 1790 to 1811, 2s; from 1811 to 1813, 2s 6d; but in 1813, when the rate of land was increased to 12d per 100 acres, the poll on the blacks was increased to 3s. In 1814, when the official change from the state currency to that of the United States was made in the revenue laws, the poll on whites and blacks was equalized, being fixed at 30 cents, while the land tax was 8 cents on the $100 value; but the next year the poll was reduced to 25 cents, the ratio between land and poll of three to one becoming the general custom of the law. In 1817, when the land tax was reduced to 6 cents per $100 value, the poll was likewise reduced to 20 cents, which remained the rate until 1854. In 1806 the age limit was reduced from 60 to 50 years, and in 1822 to 45 years for whites. The constitutional convention of 1835 provided for the equalization of the poll between whites and blacks. In collection of the tax there was much inefficiency; according to the census of 1830 there were more taxable polls than those reported by the treasury for 1836, the revenue of the state losing approximately $8,000 per annum.

The land tax was two-fold, a rate levied on 100 acres of farm property and a rate on town lots equivalent to that on 300 acres of farm land. In place of the unit of 100 acres the $100 valuation was substituted in 1814. Two characteristics of the economic conditions were illustrated by the land tax. First was the general aversion to taxation; reduction from 8 cents to 6 cents per $100 of valuation in 1817 was made because large dividends were expected from bank stock. The second characteristic was the decline in the valuation of landed property. According to an assessment made p107by the Federal Government in 1815, the lands of the state were valued at $53,521,513, but a state valuation made in 1833 amounted to $42,916,633, a decline of over $10,000,000, yet the acreage in the two years showed an increase of nearly 1,250,000 acres. One cause of the decline was undoubtedly the inefficiency of the assessment law; another was the general economic depression that pervaded the state.

In addition to the rates on poll and land were the miscellaneous taxes; they included licenses (such as carriage wheels, stores, billiard tables, peddlers, gates, shows and curiosities, brokers, and negro traders), imposts, and taxes on bank stock. On this class the licenses were the most peculiar. The store tax, from its origin in 1804 to 1809, was 50s on each store; from 1809 to 1820 a distinction was made between wholesale and retail houses, the former being taxed more than twice the amount of the latter; but in 1820 the tax on retail merchants was limited to those "who shall sell goods, wares and merchandise, not the growth and manufacture of this state." Likewise the peddler's tax was limited in 1810 to those who sold goods not grown or manufactured in North Carolina. These distinctions were evidently infractions of the Federal Constitution, but distinction between the products of North Carolina and those of other states remained in the revenue system down to 1860.

There were other anomalies in the miscellaneous taxes. One was the impost, a license of 50s levied from 1804 to 1810 on all who imported and sold goods not subject to the revenue laws of the United States. Another was a tax of 2s 6d on each saw or row of teeth, used in each cotton gin, the revenue being applied to the payment for the patent rights on the cotton gin held by Miller and Whitney. Still another peculiar tax was that on carriage wheels, levied from 1784 to 1793. The tax on the stock of the banks of Newbern and Cape Fear held by individuals was the most reliable of the miscellaneous taxes, for it increased with each issue of stock by the banks. The average annual amount realized from all miscellaneous taxes from 1810 to 1834 was $8,958.

In 1808 the revenue was increased by dividends from bank stock held by the state. Prior to 1819 the entire dividends p108from the state stock were devoted to the redemption of paper money and to general expenditures, but in 1819 and 1825 a large part of the bank dividends were diverted to the Fund for Internal Improvements and to the Literary Fund. Then followed a period of decline in dividends, noted in the previous chapter. The entire amount of bank dividends appropriated to general expenses from 1808 to 1834 inclusive was $588,274.92, or $22,625.75 per annum.

Finally, the sale of public lands was also a source of revenue, but the proceeds were appropriated to the Fund for Internal Improvements and to the Literary Fund.

Classified statements of the annual revenue derived from each source are not obtainable except for a few years prior to 1828. But the percentage of the revenue from each source for 1805, 1812, 1818, 1825, and 1830 may be taken as typical; for 1805 was a year prior to the charter of the banks, 1812 marks the beginning of the inflation of the currency, 1818 is typical of the high dividends from the banks, while 1825 and 1830 illustrate the years of depression.

Year Total Revenue Land Tax Per Cent of Total Poll Tax Per Cent of Total Miscellaneous Taxes Per Cent of Total Bank Dividends Per Cent of Total
1805 £26,026. 1.10 £7,039. 1.14 27 £11,043. 9.10 40 £7,943.19.16 33  
1812 £33,155. 0. 2 £7,681. 0. 7 28 £15,103. 7. 2 47 . . . . . . 24.3 £2,500 .7
1818 $137,712.34 $35,528.16 25 $32,027.64 23 $26,726.54 19.5 $43,430 31.5
1825 88,341.62 26,111.95 29 26,665.42 30 14,151.75 16.8 21,412 24.2
1830 111,106.09 24,547.57 22 27,923.06 25 44,896.00 41   13,840 12. 

The expenditures, like the revenue, were meager, From 1800 to 1812 the average amount was $67,469.16 per annum. This included the redemption of certificates, which was covered by the receipts from land sales. In 1813 the expenditures rose to $115,796.76, and from 1813 to 1835 inclusive the average annual expenditure amounted to $131,571.77. Among the causes of this increase was the War of 1812; another was subscriptions to stock of the banks and various navigation companies, and still another was the redemption of treasury notes which had been issued in 1817 and 1818. In 1829 and in each year until 1836, excepting 1833 and 1834, expenditures were greater than the receipts, as the following table illustrates:

p109 Year Balances of Previous Year Receipts Total Available Expenditures Balance
1829 $93,343.54 $101,821.32 $195,165.12 $121,151.10 $74,014.12
1830 74,014.12 111,106.09 185,120.21 115,369.37 69,750.81
1831 69,750.84 95,733.40 165,484.24 132,023.29 33,023.29
1832 33,023.29 94,500.42 127,523.42 119,598.68 7,924.73
1833 7,924.73 188,819.97 196,744.70¾ 138,867.46 57,877.24
1834 57,877.24 202,127.28 260,004.52 191,571.11 68,433.41
1835 68,433.41 150,109.56 218,542.97 171,686.30 46,856.30

The immediate causes of this deficiency were the redemption of the treasury notes issued in 1823, the building of the state capitol, and a decline in revenue due to the suspension of bank dividends. But a deeper cause of the crisis was the instability of the regular revenue, especially the lack of increase in the land tax, which showed a small but steady decline after 1820, and also the failure to get full returns for the poll tax. Thus the revenue did not show a normal expansion to meet the increased expenditures. In 1833 and 1834 the strain was relieved by stock dividends from the Bank of Newbern and the State Bank, but in 1836 a subscription for $375,000 to the new Bank of the State of North Carolina fell due and the treasury faced bankruptcy. In this crisis relief was found in the surplus revenue distributed among the states by the Federal Government.

In the administration of the revenue there were disorder, inefficiency, and corruption. At the close of the Revolution the debts and arrears due from revenue officials amounted to £10,890.8.11 in currency and £10,056.8.0 in certificates; by 1793 this had increased to £43,310.12.3 currency and £42,441 certificates. Moreover, as indicated above, a vast amount of property was not listed for taxation, and a large number of polls paid no poll tax. In addition there was a loose method of accounting which opened the way for misappropriation of funds. A review in detail of the rules regarding administration of the revenue shows how imperative was the need of reform and how late it came.

First of all, the methods of assessing and collecting the revenue were unsatisfactory. For listing the property the county court was responsible. It appointed assessors, consisting of justices of the peace, who made an inventory of the taxable property based on a sworn statement of the property p110owners. The lists were returned to the clerk of the county court, who sent one copy to the comptroller and another to the tax collector. The collector, appointed by the county court, paid the revenue to the sheriff, also an appointee of the county court, who forwarded it to the state treasurer. Such a method of levying and collecting had several grave defects. One was that the local revenue officers were appointed by the county courts, whose members were appointed by the governor on the recommendation of the members of the legislature for the county. Thus the local officers were not elected by the people and were not held responsible to them. In each county there was an official ring, the members of which were inclined to act in the interest of each other rather than that of the state. By way of illustration, the clerks of the county courts often failed to take the bonds of the collectors, which the law required to be equal to twice the amount of the taxes to be collected. The sheriffs, who in 1791 became the sole collectors, were notoriously corrupt. Although under special bonds of £2,000 for the collection of the taxes, many of them failed to settle their accounts with the treasurer and, when suits were brought against them, judgment secured, and their property attached and offered for sale, the reports returned by the officials were, "Not sold for want of bidders." The clerks of the court also did not always send the comptroller lists of the assessed property, and, strangest of all, the delinquent officials often appealed to the legislature and secured a dismissal of the suits against them pending in the courts. Evidently there was a lack of sense of public duty in the official class.

Another evil of the local administration was the small recompense for the work required. In the early days the collectors were paid at the discretion of the county courts; later they were entitled to a commission of 3 per cent and the sheriffs to 1 and 2 per cent; after the sheriffs assumed the entire duty of collection, their commission was increased to 6 per cent. According to Treasurer Haywood, the better class of citizens would not work for such small compensation.

As a means of protecting the state from dishonest officials, p111citizens who had become involved in their accounts were in 1793 made ineligible for membership in the legislature, and special collectors of arrears were appointed to settle the accounts of delinquent officials. A considerable sum was realized by the latter measure, how much cannot be ascertained. The most efficient means of ending the corruption and inefficiency in the local administration was the law of 1806 which prohibited the reelection of a sheriff unless he showed receipt in full for the taxes collected by him; in the same year the clerks of county courts were made subject to a fine of $500 for failing to report the assessment lists to the comptroller.

Another evil of the local administration was the imperfect assessment of property. Each property holder gave in the amount of his property under oath and valuation was made by the assessors, but in case of over-valuation appeal might be made to the county court; by a law of 1814 the assessors were allowed to summon a jury of two free-holders to make a new assessment if the land was under-valued by the owners; and in 1819 a Board of Appeals of three was appointed by the court of pleas and quarter sessions to hear complaints and to revise the assessment. In 1819, also, the assessors were required to have a copy of the Federal Assessment List of 1815; and assessment in the future should not be less than that. But in spite of this requirement the valuation of property in 1833 showed a decline in values since 1815.

Inefficiency was not confined to local administration. The management of the finances by the officials of the state government was marked by poor accounting, carelessness, and incompetency, which finally bore fruit in defalcation. The state financial officers were the treasurer and the comptroller, elected by the legislature. Their duties and relations to each other were poorly defined. The treasurer, who received the revenue from the sheriffs, made an annual report to the legislature, and his accounts were formally examined by a committee on finance. But his report was not a balance-sheet; usually it was a business letter, giving the amount of the balance of the previous year, the amount of the income, the expenditure, and the balance at the close of the fiscal year. For a detailed statement of expenditures and income reference had to be p112made to the comptroller. His oversight of the income was due to the fact that he received from the county court the tax lists of the counties and so informed the treasurer of the amount due from the sheriffs; moreover each sheriff or revenue officer was required to secure two receipts from the treasurer and to file one with the comptroller. Thus the comptroller kept check on the income of the state and the expenditures were likewise audited, for no draft or warrant could be paid by the treasurer until certified by the comptroller, except warrants for salaries of the members of the legislature and the judiciary. However not until 1814 was the comptroller required to make a printed annual report of the transactions of his office to the legislature.

There were three defects in this method of public accounting. First of all, the comptroller did not have oversight of the actual money in the treasury; he did not know where the cash was deposited, whether in bank or safety vault. It is a matter of interest that a large sum of money was kept in a trunk in the treasurer's office long after banks were organized, for the purpose of meeting the incidental expenses of the government. Second, the auditing by the comptroller did not include all the funds of the state. He had no supervision over the appropriated revenue, consisting of the Fund for Internal Improvements and the Literary Fund. These were cared for and reported on by the treasurer alone. Third, the method of bonding the treasurer was not adequate. By a law of 1784 the bond was fixed at £100,000, to be given before the treasurer entered office and to be approved by the governor and the council of state. But in 1801 the law was changed, so that the bond was to be given thirty days after the election of the treasurer and its amount was to be equal to the balance in the treasury plus the expected income of the approaching year. In 1819 the approval of the governor's council was withdrawn. There was also no provision to compel the bonding of the treasurer, nor was there any penalty on him for failing to give security. For the year 1826‑1827 no bond had been given by the treasurer.

With such a system of administration the way was open for misappropriation of public funds. In 1827 a large defalcation p113was disclosed. The treasurer from 1787 to 1827 was John Haywood. Few officers of the time had to such an extent as he, the respect and confidence of the people; he was popularly known as that "great and good man." There seems to have been no suspicion of his management until 1820, and then an investigation exonerated him. In 1827 he died, and when the committee on the treasury at the succeeding legislature examined the accounts and the money on hand, it was found that $69,377.34 were lacking. Of this amount $28,184.32½ were charged to the Literary Fund and $22,195.15⅞ to the Fund for Internal Improvements — a worthy example of the result of exempting those funds from inspection by the comptroller. When the defalcation began, was never disclosed. Tradition says that it was due to one of the clerks in the office, but the report of the committee of investigation made more likely a gradual use of the money for private purposes. The popularity of Mr. Haywood among the people was so great, however, that the defalcation was believed by many to have been nothing but a false charge worked up by his enemies. As the treasurer had given no bond for his last year's term, the only method to recover the funds was to settle with his estate. All private claims to his property, except the widow's dower right, were surrendered. Sales were made from which $47,601.37½ were realized, leaving a balance due of $21,735.96. Suit was then entered against the estate for this amount; the executors submitted that they could raise only $7,176.60 and judgment was accordingly entered. However only three payments were credited, amounting to $4,341.98. Thus a balance, in principal and interest, of $17,740.40 apparently remained unpaid.

Fortunately the finances were not seriously impaired by the defalcation. The immediate result of the investigation of the treasury was reform. Among the charges made were the biennial instead of annual election of the treasurer; the requirement of a bond, approved by the governor and the speakers of the House and Senate, to the amount of $250,000, to be given by the treasurer before entering on the duties of his office; an itemized account of receipts and expenditures to be reported to each session of the legislature and to be published p114with the laws; monthly settlements with the comptroller; the deposit of money on hand in the banks; the inspection of the Fund for Internal Improvements and the Literary Fund by the comptroller; and the registration and endorsement of the state's bank stock by the secretary of state.

By far the most difficult financial problem prior to 1836 centered around the redemption of the currency issued during the Revolution and the years immediately after and the relation of the state to banking enterprises.

How perplexing was the situation in regard to the currency is shown by the following statement of the finances for the year 1788.

Money of 1783‑'85 Certificate Cont'al
Doll's
State
Doll's
Remarks
Receipts

Balance

£ 6,745. 5. 3 £ 65,227.14.11 13,231 408,068 Continental bills were rated with certificates at 800 to 1; state dollars likewise; £1 equivalent to $2.50, face value.

Arrears

54,131.18. 8 45,329.10. 8
56.12. 2
204.10. 8
Taxes £35,862.14. 3 £ 28,475.16.10 32,315 169,476
16. 2. 4
84.14. 4
Total £96,739.18. 2 £139,394.11.11

Expenditures for arrears

£60,877. 3.11 £      90.12.8
110,557. 5. 7 160,112 431,919

Current exp. incl'ng sinking fund burned

27,555.10. 9 80. 1. 1 The certificates, including contin'tal and state dollars reduced, charged to expenditures represent redemption, for they were punched and burned with exception of £90.12.8.
£88,432.14. 8 215.19. 3
221.16. 9
£111,360. 3. 5
Balance £ 8,307. 3. 6 £ 28,034. 8. 6

The relation of the state to the four kinds of circulating medium in the above table was not uniform. There was no obligation to support the continental and state dollars, for the former had been issued by the Continental Congress and had been in part funded by the paper money issued by the state during the Revolution; while the latter, which composed the revolutionary issues, had been repudiated as a tender in the payment of debts in 1783. But they were still receivable for taxes and their contraction was desirable; hence large quantities were burned each year by order of the finance committee of the legislature. But the obligation to the state currency of 1783 and 1785 and to the certificates was different; the former p115had been issued by the state as its standard money; the latter were promises to pay, bearing interest, and the honor and credit of the state required their redemption.

The confusion in the certificates, their great depreciation, and the interest accruing from them demanded careful and thorough consideration. In 1788 a tax of 3s on each 100 acres of land, 9s on the £100 value of town lots, and 9s on the poll was levied in state or continental dollars, bounty certificates at 800 to 1, specie certificates at their nominal value, or currency certificates at the legal rate of depreciation, as a means of redemption. Thus the state and continental dollars were to be contracted along with the certificates. The next year a more specific measure for "redeeming the certificates and paying the domestic debt" was enacted. This provided for calling in all the certificates by January 1, 1791, and replacing the genuine ones with new certificates, to be redeemed by a tax of 1s on the 100 acres, 3s on the £100 value of town lots, and 3s on the poll; and the money in the treasury not reserved for some other purpose was also to be used for redemption. The report on the reissue, made in 1792, showed that £49,301, 9s. 4d. of new certificates had been put into circulation and that there was an outstanding interest debt of £38,372, 16s. 9d. The next law concerning certificates was that of 1794 which made them receivable for land grants at the rate of 50s per 100 acres and required a second filing of certificates, but excepted from the benefits of the law were the Warrenton certificates of 1786 and those issued by Patrick Travers, of Cumberland County. In 1799 a third registration of certificates was ordered, to be completed by December 1, 1800, and all certificates not registered by that date were forever barred from redemption and were not to be received in any payment made to the state. The amount registered was £16,598.5.11 and the accrued interest was estimated at £32,000, increasing at the rate of £1,000 per annum. In 1801 the principal of the certificate debt was estimated at £15,000 and the treasurer was authorized to purchase that amount and to issue new certificates for interest due, but the results were not published. In 1802 another purchase was authorized at the rate of 15s to each £ of certificate; again, the result is unknown.

p116 In the meantime the sale of land for certificates went steadily on and seems to have been the principal means of redemption. Just when the process was completed is hard to find for the treasurer never made a special report concerning it; no redemption is mentioned in his annual reports after 1817, though income from land sales continued to be given for several years. The following outline, culled from the treasurers' report, show this process of redemption:

1795 £10,108, 18s,  5d.
1796 £37,043, 19s,  3d.
1797 £ 8,171,  0s,  6d.
1798 £ 4,852, 96s,º  2d.
1799 £ 7,134,  9s,  6d.
1800 £ 2,918, 19s,  5d.
1801 £ 4,169, 16s,  0d.
1802 £ 5,987,  1s,  1d.
1803 £ 4,858,  0s,  7d.
1804 £ 5,518,  2s,  9d.
1805 £ 3,331,  8s,  3d.
1806 £ 3,643,  5s, 10d.
1807 £ 2,515,  0s,  1d.
1808 £ 2,023, 11s,  9d.
1809 £ 1,694, 17s,  9d.
1810 £ 2,606, 18s, 11d.
1811 £ 2,618,  1s,  4d.
1812 £ 2,550, 10s, 10d.
1813
1814
1815
1816 $5,477.55
1817 $6,352.56

The state currency, as well as the certificates, required redemption for three reasons; first, its continuous depreciation, the ratio to specie never being less than two to one; second, no new bills of credit could be emitted to replace the depreciated currency after the ratification of the Federal Constitution; and third, the new standard of currency adopted by the Federal Government made the North Carolina pound, shilling and pence currency an anachronism; indeed, in 1809 the currency of the United States was recognized as the lawful currency of the state, and permission was given to keep the records of the state in dollars and cents, but the state currency was too widely circulated to permit immediately carrying out the latter provision.

The first step toward redemption was the tax of three pence on each £ value of property in the currency act of 1783; in that of 1785, 5s 6d on the 100 acres of land, 1s 6d on the £100 value of town lots and 1s 6d on the poll were levied for the same purpose. During 1786, 1787, and 1788 £27,304, 19s p1171d were collected and were burned; worn out currency was also destroyed, making a total of £40,218, 19s 4d retired. But in 1789 and each subsequent year the sinking tax was suspended; doubtless the immediate pretext for this was the tax imposed on certificates, but a larger and more permanent cause was the general antipathy to taxation in the state.

The final method adopted for retiring the currency was the use of dividends from bank stock and the co-operation of banking institutions. The first banks organized in North Carolina were the Bank of the Cape Fear and the Bank of New Bern, which received their charters in 1804. Their combined capital was $450,000, of which the Bank of the Cape Fear had $250,000, and the Bank of New Bern $200,000; the amount of notes and debts of the former was not to exceed $750,000 over the monies on deposit, of the latter $600,000; also the right of the state to subscribe 250 shares in each institution was reserved.

The immediate effects of the banks on finance and commerce were good. Their notes, engraved on silk paper, were exchanged for the ragged state currency. The dividends were promising. So in 1807 the treasurer was ordered to subscribe the number of shares reserved for the state. Soon, however, the banks began to return into circulation the state currency which they had received, offering it in the payment of debts instead of specie or their own notes. Thus specie was hoarded and depreciation of the bank notes set in, for they were redeemed only in the depreciated currency. Two remedies were applied. The first was to levy a tax of one per cent on bank stock held by individuals and to limit excessive note issues by ordering the forfeiture of the charters of the banks, if notes in excess of the amount authorized were issued. This was a conservative measure, enacted in 1809. The next year a radical, almost revolutionary measure was taken. That was the charter of a new bank, to be known as the State Bank of North Carolina, which, it was hoped, would absorb the existing banks and equalize the relation between currency and specie. The charter provided for a central bank in Raleigh with branches at Edenton, New Bern, Wilmington, Fayetteville, Tarboro, and Salisbury, with a capitalization not p118exceeding $1,600,000, of which $250,000 were reserved for the state, to be paid for in gold and silver or stock of the United States. In subscriptions preference was to be given to the banks of New Bern and the Cape Fear, and no new bank was to be chartered until the charter of the State Bank should expire in 1830. As the charters of the existing banks expired in 1820 it was intended that their capital would thus be invested in the new institution. Three-fourths of the capital stock was to be paid in specie, one-fourth in paper. The indebtedness by bond, bill, note, contract or otherwise was not to exceed $4,800,000 above the amount on deposit, and all such liabilities, also debts due the bank, were to be redeemed in gold and silver upon judgment in the courts. After the bank went into operation the state currency should not be received as legal tender in payment of debts to the bank, but the state's dividends should be used to redeem the paper currency when presented to the bank. Thus the redemption of the outstanding paper money was provided for along with new banking facilities.

As subscriptions for stock in the new corporation were not as liberal as was expected, the charter was amended in 1811 by extending its duration until 1835, allowing the bank to withhold 4 per cent of the interest on unpaid stock subscribed by the state, and by exempting the stock and dividends from taxation, provided that the bank would, for one year, from December 18, 1816, to December 18, 1817, take up and exchange the paper currency of the state for bank notes or specie at the rate of 10s for $1.00; on compliance with this provision, the governor was authorized to issue a proclamation that the paper money was no longer a legal tender except to the bank, and the bank should return the currency to the state as dividends on the state's stock.

Thus the redemption of the state currency was provided for and in 1816 the state's financial transactions began to be reckoned in the currency of the United States instead of the state currency. How much of the state currency was retired by the State Bank in the year 1817 is unknown; the amount redeemed by dividends from 1813 to 1824 inclusive was £93,915.


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